Summary: Our December 2017 blog outlines the key employment law developments over the last month. These include an important European decision on holiday pay, two decisions on the gig economy and a case on discrimination on grounds of religion or belief. We also look at the employment implications of the Budget and new guidance from the ICO on GDPR.

Holiday pay – the right to paid annual leave carries over indefinitely where a worker’s right to paid leave has not been complied with

The ECJ, in a case referred by the Court of Appeal, has considered the carry-over of holiday and the entitlement to be paid for it where a worker has not been given paid annual leave in breach of the Working Time Directive. In this case, the worker was treated as self-employed and so not entitled to paid holiday. On termination, he sought to recover holiday pay for all the holiday he had been entitled to but had not taken during the course of his engagement because it would have been unpaid.

The ECJ held that where an individual is not entitled to paid holiday, they are entitled to say that they have been “prevented” from taking it. Accordingly it will carry over indefinitely until termination. The ECJ distinguished this from sickness (where holiday does not roll over indefinitely). With sickness, the rules balance the needs of the worker and the difficulty faced by the employer in covering their absence. By contrast, where an individual has been prevented from taking leave, there is no balance: the ECJ said that an employer who has not complied with its obligations must bear the consequences.

Why this matters

This is another significant European decision which affects UK employers. The ECJ was clear that, even where an employer has not granted paid leave because it mistakenly believed the individual was self-employed, the individual’s right will continue to accrue to termination. This potentially has significant consequences for gig economy employers faced with findings that their self-employed workforce are in fact workers (see, for example, the Uber case below). This also throws into question whether the UK’s mechanisms for limiting historic holiday pay claims (for example under the Bear Scotland decision and the Regulations introduced to limit back pay claims) comply with EU law. Further consideration of these issues by the UK courts are required before there are clear answers to these questions.

Gig economy employment status – importance of how the arrangements work in practice

Two decisions continue the trend of focusing on the nature of the arrangement in practice rather than accepting the label given to arrangements by the parties.

In the latest decision in the Uber litigation, the EAT upheld the Employment Tribunal’s decision regarding the employment status of Uber drivers. The EAT agreed that they were engaged as workers as long as they were signed on to the app and were ready to accept bookings. Uber’s argument that it was just a technology platform was not accepted. The EAT agreed that it was correct to reject the characterisation of the relationship from the documentation and to look at “the reality of the situation”. Uber has sought permission to appeal directly to the Supreme Court.

The second case concerns Deliveroo. The Independent Workers’ Union of Great Britain submitted an application to the CAC to be recognised for collective bargaining for a group of Deliveroo riders. Deliveroo objected on the basis that they were not workers. In this case, the unfettered ability that exists in practice for the riders to use a substitute was determinative and meant that the riders were not workers. It did not matter that the contract had been drafted to include substitution so as to avoid worker status. Nor did it matter that the inclusion of the substitution clause made little sense from a commercial basis. What mattered was how the arrangement actually worked. Since the right to substitute was used in practice, the CAC found that the riders were not workers.

Why this matters

Both cases highlight the importance for gig economy businesses of considering how the relationships with their self-employed workforce work on the ground. The Deliveroo case highlights that the intentions behind a structure are not relevant. As long as the arrangements in practice do not point towards worker status, it does not matter if the arrangement was deliberately structured in this way. By contrast, the Uber decision confirms that cleverly structured written documentation is not enough - the Employment Tribunal will look behind this and consider how the relationship works in practice.

Religious discrimination – Trust did not discriminate in removing non-executive director for expressing views against same sex marriage in the media

A non-executive director of an NHS Trust was removed from his post for appearing in the media to discuss his view that same sex adoption should not be permitted. The director is Christian and strongly believes that it is in the interests of every child to be brought up by a mother and a father. He argued that his treatment amounted to direct and indirect discrimination, harassment and victimisation on grounds of religion and on grounds of a philosophical belief.

The claim did not succeed. The Employment Tribunal held that the treatment was not “because of” his religion or his belief, but was because he had repeatedly spoken to the media without informing the NHS Trust, although he had been asked to do so. His direct discrimination claims did not therefore succeed. His indirect claims also failed on the basis that he had not been able to establish a PCP or group disadvantage.

Why this matters?

This is the latest in a line of cases where religious belief conflicts with other protected rights, in this case sexual orientation. As is often the case, the Trust was able to avoid a finding of discrimination because it could establish that the treatment was not “because of” the director’s beliefs but because of the way he manifested them. This is a controversial issue, with Christians arguing that discrimination law fails to offer them full protection. We understand this case is being appealed and so there may be further developments in this area.

Roundup of other developments

GDPR: The ICO has published guidance on the forthcoming changes which are aimed specifically at small businesses. These form part of the ICO’s SME toolkit.

National Insurance: The National Insurance Contributions Bill will now not take effect until April 2019. This applies to the change to NICs on termination payments. However, the other changes to the tax on termination payments are still due to take effect from April 2018.

Autumn Budget: The Budget included an announcement of new Minimum Wage rates. The new rates apply from April 2018 and are as follows:

Apprentices - £3.70 an hour

16-17 year olds - £4.20 an hour

18-20 year olds - £5.90 an hour

21-24 year olds - £7.38 an hour

National Living Wage (those aged 25 and over) - £7.83 an hour.

The Government has also announced that it has commissioned research into IR35 and is proposing to extend to the private sector the off-payroll working reforms which it has made to the public sector. This research is due to be published next year.

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